Why Are Indians Suddenly Buying Diamonds?

Why Are Indians Suddenly Buying Diamonds?:

While wealthy Indian families embrace the diamonds trend, some investors are getting nervous, wondering whether gold demand will continue to drop.

Should gold investors worry?

“We don’t believe it’s over for gold over there,” said David Darst, Chief Investment Strategist of Morgan Stanley Smith Barney . “Sure, Indian buyers have backed away because of the high prices, but they won’t abandon it. They’re waiting for the rupee to climb or gold to fall.”

“Before De Beers started marketing in India, the market was entirely gold focused. Now De Beers spends $4 to $5 million per year on consumer marketing in India,” said Forevermark CEO Lussier. Over the last five years, Lussier adds that DeBeers’ marketing investment has been rewarded with over 20 to 30 percent sales growth “year in and year out.”

Worldwide retailers are gunning to gain share before the diamond jewelry market becomes as crowded as Indian cities themselves. Their main competitor is Indian diamond jeweler Tanishq, already known to dominate the largest cities, Mumbai and Delhi. Indians say Tanishq's popularity is due to its modern designs, coveted by India’s younger generation.

“When I look at my mom’s wedding jewelry, is it mostly gold. Indian wedding jewelry has become much more modern, and more diamonds are used,” said Indian newlywed, Saniya Ghandi Bhardwaj.

In affluent families, the mother and father of the bride give custom-made jewelry sets as a ceremonial gift to their daughter. The importance of this gift, Bhardwaj explained, is essentially based in traditional Hindu theology, which holds that the bride is being sent to the groom’s family. Depending on the family wealth, traditional gifts can consist of gold only, but the trend among the affluent has turned to diamonds.

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